Scarthingmoor MA Essay Prize 2018

Abstract: The effect of minimum wage policies on labour market outcomes is a longstanding topic of debate in economics, recently revived as Alberta and Ontario announced large minimum wage increases. I use aggregate panel data for Canada between 1991 and 2017 to update the minimum wage elasticities of total employment rates and participation rates for different age groups and compare them to the elasticities estimated by Fortin (2010) and Brouillette et al. (2017). I also estimate unemployment rate elasticities and compare these to Swindinsky (1980) and to the time-series studies summarized by Brown, Gilroy and Kohen (1982). Next, I estimate minimum wage elasticities for part-time and full-time employment rates separately and compare these to Campolieti et al.(2006). I then calculate the fraction of each province's population that worked part-time for voluntarily or involuntarily reasons and extend the literature by estimating separate minimum wage elasticities for voluntary and involuntary part-time employment rates.Finally, I estimate the impact of minimum wages on weekly hours worked for part-time workers and compare this to Sabia's (2009) study of American retail workers.For 15 to 19-year-olds, the minimum wage elasticities of employment and participation rates are negative and significant while the effect on unemployment rates is positive. Minimum wages also have a significant effect negative on employment rates for 20 to 24-year-olds, while 25 to 54-year-old adults do not experience significant minimum wage effects for employment, participation, or unemployment rates. All of these results are consistent with the literature. Minimum wage elasticities are significantly negative for both part-time and full-time employment rates for teens; however, the effect is larger for full-time teens. Contrary to previous findings, I find that part-time employment rates for 20 to 24-year-olds increases in response to minimum wage increases, whereas full-time employment for this age group falls. I estimate significant positive minimum wage elasticities for involuntary part-time employment, both for 15 to 24-year-olds and for 25 to 54-year-olds. This suggests that minimum wage increases reduce the number of full-time positions available, forcing some individuals to work part-time. Lastly, I conclude that part-time employees do not experience a significant drop in weekly hours as a result of minimum wage increases, which is consistent with the findings of Sabia(2009) and Zavodny (2000).